Step-by-Step Guide to Prepare Your Startup for a Funding Pitch
Having a business idea that you believe has the potential to rock the world is quite thrilling and energizing. But to convert your business idea into a business, you need optimum funding.
Here starts the most nerve-wracking part of your entrepreneurial journey because if your business idea does not attract investors, all your efforts will go down the drain.
A whole lot of preparation is required on your end before scheduling an appointment with the investors for a funding pitch. Hold your horses and calm your nerves to prepare your startup for a successful funding pitch by following the steps discussed below:
Conduct a Feasibility Study
As a founder, it is crucial for you to know the viability of your business in measurable values.
The feasibility study of your business idea will access the feasibility of your business idea from different perspectives and will help you to make informed decisions. It will save you from wasting your valuable time, money, and other resources if the idea does not turn out to be feasible.
An integrated feasibility study put forth a strong message that you understand the ins and outs of your business idea, its capacity to sustain and grow, and are also well equipped with the information regarding the procurement of resources in terms of capital, machinery, and employees.
Know Your Value Proposition
Investors are deeply interested in knowing the value your product/service will create both for them and the market.
You need to have a grip over your business model and well prepared with the answers related to the uniqueness of your product/service, existing competitors, pricing model, and time of launch.
If investors come to know that you understand that you are ready with a thorough analysis of the needs of the customers and how you will deliver it to them, they will definitely give value to your funding pitch.
Map Your Target Market
It is crucial for founders to know their pool of customers whose needs your product will fulfill. Chart out a campaign to know the whos and hows of your potential customers.
After analyzing your target audience preferences decide upon the pricing model and plan your marketing tactics. It is easy to convince the investors if you can prove the need for your product in the market and its potential to add value to the life of the customers.
Furthermore, it is important for the founders to show the investors that their startup has the potential to bring in a revolutionary change in their industry and a ready plan to make their place within the current players and to rise above them. This will indicate the probability of sustainability and a higher return of investment to the investors.
Strengthen Your Team
An early-stage startup can show its survival and growth only through analysis, forecasts, and statistics.
All these values are just predictions that can waiver easily in dynamic market conditions. Therefore, investors bet on the jockey (founding team), not on the horse (business idea).
Investors are keen to evaluate your entrepreneurial qualities as the founder of your company and your vision for its growth and your camaraderie with your team members. A confident, passionate, and well-rounded team acts as a showcase to your startup. It enhances your credibility and boosts the investors’ sense of security while deciding to fund your business.
Grab Enough Traction
Your product might be unique with multiple features and solving the problem of a sizeable market, but that is not enough to attract the attention of investors.
If you are already in the market and have some grip on it, then it is a bit easier for you than if you are about to launch. You need to have traction metrics with you to prove your worth to them. Around 34% of startups fail due to lack of enough traction, making it the center point of the whole game.
Prepare Your Financial Projections
Financial projections help you decide your growth milestones and plan your budget according to that. They include various financial aspects of a company and allow you to monitor the impact of change in one aspect, on its other aspects. For example, an increase in sales can impact your profitability.
Early-stage startup owners often find it daunting to write their financial projections when actually there are no business transactions. They need to make informed predictions based on the data, statistics, and financials procured from industry associations, government records, and niche industry.
Financial projections allow the investors to have a sneak peek into the financial health of the startup, its target achieving capabilities, and growth potential.
Well Documented Exit Strategy
An exit strategy is one of those crucial factors in which the investors are keenly interested. But, many founders sideline this factor while preparing their funding pitch.
If we see its importance from an investors’ perspective, they want to know the return on their investment while supporting your startup. A systematically written exit plan indicates your passion towards your startup as you have already written a step by step document for the smooth transfer of power, without causing harm to the growth of the organization.
Get Hands-on With Your Metrics
Gather up your metrics on all the various aspects of your business such as CAC, traction, cash runway, LTV, ARR to showcase your financial, marketing, customer acquisition strategies to the investors. Metrics are the key indicators of a company’s priorities and give a fair idea of its performance till now and reflect its future growth pattern.
Research About Your Potential Investors
Make sure to do your homework before approaching an investor.
Ask questions to know their vision and real-time involvement in your company. Entrepreneurs must research the track record of the investors to understand their expertise in your industry.
Your investor not just brings in the capital but also the skills and experience to leverage the growth of the company; therefore to tap their potential, entrepreneurs must research the track record of the investors to understand their expertise in your industry and business model.
Work on Your Brand
It is crucial to understand the vibe of your target demographics while developing your brand. Critically examine their tastes, lifestyles, and communicative behavior.
Hire a creative team or outsource one as per your convenience and work on developing the personality of your brand. Observe your competitors and find out how they are connecting with your shared customer base to strain the qualities of their brand to use them in a unique way while establishing your brand.
Brainstorm about the colors to be associated with your brand and create a brand logo that visually describes the story of your company. Similarly, work on creating a website, your business card, your sales deck, and other handouts that align the vision and ethos of your company.
Prepare a Pitch Deck
Here, comes the time to tie all the strings together. Prepare slides focusing on various aspects of your business. Begin with introducing yourself and your team and tell the investors about their accomplishments, roles, and responsibilities in the company. Tell them concisely about the vision and mission of your startup.
Make sure your presentation contains only the relevant information that is valuable for the investors. The attention span of an investor is generally 10-12 slides long. So, keep it simple, digestible, and most importantly engaging and exciting.
Ace Your Pitch With Practice
Practice your funding pitch presentation with your team or experienced founders and brainstorm the possible question that could be asked to you by the investor. Prepare the possible answers and substantiate them with relevant, realistic, and recent metrics to add value to your case and to make it more convincing. Practice sessions allow you to iterate your pitch, work on your delivery, and give you the confidence to project your business idea with assertively.
Ensure in advance that you manage the time of your meeting effectively. Practice with a timer to round off your presentation within 30 minutes so that there is plenty of time with you and the investor to have a discussion about your business idea and to know each other’s perspective and vision about it in a better way.
Be Ready to Present Your Pitch Virtually
During the Coronavirus pandemic, many investors prefer to schedule the funding pitches virtually to avoid physical contact. Therefore, it is essential for you to understand the features and functionalities of reliable video conferencing applications like Google Meet and Zoom. Also, to leave a lasting impact on the investor, conduct a mock session with your teammates to know your voice quality and tone, and work on it to have better control over your speech.
We hope this step by step guide helps you to prepare your funding pitch systematically. A systematically laid down pitch deck covering all the essential aspects that the investors are looking for indicates to the investors about your passion and seriousness for the startup. A successful funding deal is just a winsome and convincing pitch deck way.
Do you have a pro tip for creating a compelling pitch deck? We would love to know.
Vadika is an experienced web content specialist and a business blogger at Alcor, a global investment bank. She’s best known for her insightful blogs on the latest trends and developments in the startup ecosystem. Apart from her work, she loves to bake and go out for gadget-free nature walks.